Gold price watches for restoring markets’ calm

At the time of writing, the price of gold is $1916.63 per ounce, making the future of the metal extremely unpredictable. The future of the precious metal is highly dependent on how fast and whether the market turbulence will abate, as well as whether the Fed will be able to hike interest rates further. Thursday’s decline in gold prices follows a week of substantial gains for the metal. Considering that the financial sector crisis has not yet been fully resolved, fundamentals are still favourable for defensive assets.

Interest rate expectations may continue to decline if further bankruptcies occur or if the market begins to price in the danger of ripple effects. As a result, the gold price may experience additional upward movement.

Although others anticipated that the market would only increasingly bet on an uptick in interest rates in the second half of the year, observers had previously projected that gold would cost $1,950 per ounce at the conclusion of the year.

As a result of the turbulence in the banking industry, this has now happened considerably earlier. As a result, if current trends continue, the Gold Index XAU/USD should already have reached our year-end forecast.

If current concerns and worries can be reduced, the Fed may be able to increase interest rates even higher in order to reduce the still-too-high inflation rate. In this scenario, gold would probably forfeit its most recent gains.

Even in this case, economists would still anticipate a gold recovery for the second half of the year because the actual economy should then begin to feel the effects of the aggressive interest rate increases. The market’s attention would then shift to potential interest rate reductions, which ought to make gold look more appealing once again in relative terms.